FTB Adds Tax Expert to Its Abusive Tax Shelter Team

State Controller and Franchise Tax Board (FTB) Chair Steve
Westly today announced that the FTB has hired tax attorney Michael Hamersley,
former KPMG employee, to work on our abusive tax shelter task force.

"California is leading the way in shutting down abusive
tax shelters and making sure everyone pays their fair share," Westly said.
“I'm happy to have Mike on our side in this fight.”

Hamersley was a senior manager at KPMG when he testified
last October before the U.S. Senate Finance Committee regarding abuses
in the tax shelter area. He also appeared on PBS' Frontline, "Tax Me If
You Can," episode that examined the rampant abuse of tax shelters since
the late 1990s.

Hamersley earned his Juris Doctor degree from Georgetown
University Law Center in 1995. In addition, he holds M.B.A. and B.B.A.
degrees from Florida International University.

The FTB is very active in its efforts to crack down
on abusive tax sheltering. Legislation signed in October 2003 (SB 614,
Cedillo & Burton; AB 1601, Frommer) gave the FTB more enforcement tools
and enforces stricter penalties for investing in illegal tax shelters.
This legislation created the state's Voluntary Compliance Initiative that
allowed users of abusive tax shelters to correct their returns and pay
back the tax and interest penalty-free. This initiative that was estimated
to collect $90 million brought in more than $1.3 billion through April
15 of this year.

Estimates show California loses $600 million to $1 billion
in tax money annually through abusive tax sheltering. Abusive tax shelters
are transactions marketed with the promise of tax benefits with no correlating
economic losses. Most involve the use of multiple layers of domestic and
foreign pass-through entities such as partnerships, S corporations, and
limited liability companies.